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To quote from the 8 December Trading Statement "The strong cash generation has resulted in a net cash position of R19.8 billion on 30 November 2022". R19.8 billion / 140 492 600 shares = R140.93/share as of the time of the trading statement. Yes, they are in the process of buying another mine, but it's unlikely they have paid for it yet, and they've had another couple of months if trading since the Trading Statement.
Based on this, I don't think an estimate of £7 cash/share is totally unrealistic.
Hi pcstloup, I've found that the world bank pink sheet South African coal prices unfortunately don't add up to what Thungela publishes in their trading updates and results and also what you can see for API4 Richards Bay on barchart.com and investing.com. I mean, they give a Dec'22 average of $326.2, which is out by just over $100 to what we actually saw for the month.
I've been able to back cast the investing.com prices found at https://www.investing.com/commodities/coal-(api4)-fob-richards-bay-futures to within a 1$ of the Thungela numbers. If you want to get an average for the period you can click on "Historical Data" and then enter the date range you're interested in, download the daily prices to Excel and then average them. This give me a H2 average of $280.
The Richards Bay API4 coal price rose back above $200 yesterday.
https://www.barchart.com/futures/quotes/LV*0/futures-prices
Hi Redbull, my average of the Investing.com API4 daily prices for October is 251.56.
https://www.investing.com/commodities/coal-(api4)-fob-richards-bay-futures
I've had significant doubts over the Pink Sheets accuracy for a while, while the average of the investing.com daily API4 prices has tied back quite closely to what is in the TGA trading statements and annual results.
Sorry for the double post.
It looks like Transnet has reached a deal on spares for their locomotives with China Railway Rolling Stock Corporation. This was one of the contributing factors to their poor performance. Hopefully this will eventually filter through as increased Thungela sales.
https://www.news24.com/fin24/companies/transnet-and-state-capture-implicated-chinese-rail-giant-reach-deal-on-critical-spares-20220831
THUNGELA AND TRANSNET CONCLUDE AMENDMENT TO THE LONG-TERM AGREEMENT
On 14 April 2022, Thungela issued an announcement on SENS and RNS informing the market that
Transnet SOC Ltd, acting through its Transnet Freight Rail Division (“Transnet”), had notified Coal Export
Parties (“CEPs”) on 8 April 2022 that a number of circumstances beyond Transnet’s reasonable control
would continue to detract from Transnet’s ability to perform at its contracted rail capacity for at least the
next six months and that accordingly Transnet believed that it was under Force Majeure. Transnet also
expressed a view that these circumstances actuated a termination right of the existing Long-Term
Agreement (“LTA”), which Transnet desired to exercise.
Thungela, as well as other CEPs, rejected Transnet's view that it was entitled to terminate the LTA but
committed to engage in negotiations with Transnet in order to negotiate a deed of amendment to the LTA
for the balance of the tenure of the LTA (which expires on 31 March 2024).
Thungela and Transnet have now reached agreement on the deed of amendment, which was concluded
with the following outcomes:
• Transnet has declared a minimum contractual rail capacity of 60Mt for its financial year ending
March 2023, which will be reviewed by Transnet on a six-monthly basis with a view to increasing
this.
• Agreement on the rail tariff escalation to be applied as from 1 April 2022 for the balance of the
tenure of the LTA. Performance and underutilization (“take or pay”) penalties, in revised form, will
continue to be applied.
Thungela management is appreciative of Transnet’s constructive engagement in the negotiations, during
which time bulk coal rail services and export sales continued. The conclusion of the deed of amendment,
and the spirit of collaboration between Transnet and Thungela in achieving this, is encouraging. At this
stage, however, Thungela does not believe that these developments will have a material impact on the
Group’s operational outlook which was published as part of its interim results for the six months ended 30
June 2022 announced on SENS and RNS on 15 August 2022.
18 August 2022
The share goes ex-div on the LSE on 21 Sept, with a payment date of 10 October, so earlier than we speculated.
The JSE ex-div date is 15 August and the payment date is 26 September.
The full interim results can be found at https://www.thungela.com/investors/results
Newboots, I've also been battling with reconciling the bottom line TGA numbers in the June and July trading statements. By my calculations there is a "missing" +-ZAR900m expense. After re-reading the two trading statements there is one sentence in the July trading statement that has me concerned: "Given the strong Benchmark coal price forward curve, earnings have also been negatively impacted by fair value losses on the price risk management programme undertaken by the Group and the capital support agreement."
I wonder if this is a price hedging loss coming from forward sales that hasn't been clearly explained in the trading statements? If so, this won't have a cash flow effect in the current period, but will depress cashflow in future periods as when they sell coal at the reduced price.
Newboots, IIRC, he said that trucking would cost about $60/t, but that they were hesitant for three reasons:
1. The coal trucking industry in South Africa has high levels of criminality and theft.
2. Trucking takes longer, which ties up working capital.
3. The residents of Richards Bay are upset about the amount of coal dust, and trucking would worsen it.
If it means anything, I live in South Africa and am pretty sure these can all be be dealt with by TGA if it looks like the coal price is stays above $250/t for H2.
They said in the CFO call on Monday that they'll declare the dividend in August along with their results, on or around 15 Aug. The payment would only be later, along the same time scales as to their previous one. He also mentioned that they _might_ get slightly more efficient at the dividend process.
Here's the link to the audio of the CFO's call: https://protect-za.mimecast.com/s/20mBCNxKzVtNkMRG3fmrM9B?domain=services.themediaframe.com . He covered this in the Q&A section.
- Average benchmark coal price: $266
- Thungela discount: ~15%
- Export saleable production ~6.1Mt
- Higher cost / export ton of 1124, mainly due to decreased production / sales
- Export equity sales 6.4Mt.
- H1 cpaex R0.5 bn, expect to be low in H2
- R15.3bn cash on hand at 31 May
- EPS expected to be a least R58/share.
- Rail is still an issue, hoping for impovements in 2H
- Will announce an interim dividend arround 15 Aug
The world bank monthly coal price for May is out at $280. It's still huge compared to a year ago. This seems a bit low to me compared to both what we've seen in the May futures prices and also compared to this Coal Mint article: https://www.coalmint.com/intel/South-Africa-Higher-LNG-prices-lift-RB1-coal-prices-by-51-t-w-o-w-14911
Does anyone have any idea's as to what's going on here?
Their results for last year were released in August, but there is a JSE listing requirement that issuers publish a trading statement as soon as they have a reasonable degree of certainty that their financial results will differ by more than 20% from the prior period.
They did a pre-close update and trading statement on 6 December, prior to year end, so there is a chance we will get another one in the next couple of weeks.
Their Investor Relations people are also quite accessible if you have questions. There contact details are at https://www.thungela.com/contact
Re: the forward selling, there was an analyst question on exactly this at their latest results presentation. IIRC, the answer from Thungela was that 1) the board restricts forward sales to just 10% of annual production, and 2) their ability to forward sell is resticted by poor liquidity in the market.
Have a look at the number of open forward contacts for '23 at https://www.barchart.com/futures/quotes/LVK22/futures-prices. Each contract is 1000t. There are currently 107 open contracts for Jan'23, dropping to just 37 in Dec'23. Thungela's monthly production is arount 1.2Mt.
The Rotterdam market has a bit more liquidity, but I suspect their ability to access it is limited by their sales and marketing agreement with Anglo American.
Richt9999 - yes TGA is printing money at the moment. I really don't get why the market isn't responding to this.
My calcs also show it will earn current MV this year, but pre-tax (I use a conservative 25% tax rate) and also before the deduction of the 10% of profits that goes to the community and employee trusts.
Newboots, my calculations are in rands are are similar, but I also guessing an effective tax rate of 25% tax and deduct the 10% of profit attributable to the employee and community trusts.
Total Revenue (Rands) = 14Mt production/12 x World bank pink sheets South African Coal price ($/ton) x Average USD/ZAR exchange rate for month x 0.82 (18% Thungela discount)
Less Expenses = R890 x monthly production (14Mt production/12)
This gives pre-tax profit.
Final profit = Pre-tax profit *0.72 (100-25% tax) * 0.9 (Thungela share in profits )
So for April it would be
Pre-tax profit : (1 166 667 x 302 x 14.98 x 0.82) - (1 166 667 * 890) = R3 291M
Less tax @ 25% : R -822M
Less trusts share of profit @ 10%: -R247M
After tax profit attributable to Thungela for month: R2 222M